Applying prospect theory to predict new venture creation

Hack, Andreas; von Bieberstein, Frauke; Kraiczy, Nils Daniel (August 2014). Applying prospect theory to predict new venture creation. Academy of Management Proceedings, 2014(1), p. 15228. New York: Academy of Management 10.5465/AMBPP.2014.156

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Although prior research on new venture creation has identified several antecedents that differentiate entrepreneurs from non-entrepreneurs, scholars still have an incomplete understanding of the factors and decision processes that lead an individual to become an entrepreneur. By applying prospect theory, we introduce the reference point as an important antecedent of new venture creation. Testing our research model and hypotheses with entrepreneurs and employees, results show that entrepreneurs set more aspiring reference points and therefore find themselves more often in a perceived loss situation. Results are also robust when testing for entrepreneurial intention of business graduate students. According to prospect theory, the perceived loss triggers more risk-seeking behavior. Summing up, the reference point has a positive effect on new venture creation and differentiates entrepreneurs from nonentrepreneurs. We discuss theoretical and managerial implications of the findings and develop avenues for future research.

Item Type:

Conference or Workshop Item (Paper)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Organization and Human Resource Management > Human Resource Management
03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Organization and Human Resource Management > Organisation

UniBE Contributor:

Hack, Andreas; von Bieberstein, Frauke and Kraiczy, Nils Daniel

Subjects:

600 Technology > 650 Management & public relations
300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0065-0668

Publisher:

Academy of Management

Language:

English

Submitter:

Nils Daniel Kraiczy

Date Deposited:

22 May 2015 10:06

Last Modified:

04 Sep 2018 11:35

Publisher DOI:

10.5465/AMBPP.2014.156

BORIS DOI:

10.7892/boris.58349

URI:

https://boris.unibe.ch/id/eprint/58349

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